Mixed-Income Q&A

The facts behind SAHA's affordable housing plans.

      
      In September 2005, HUD issued the Final Rule on the Public Housing Operating Fund program. Subpart H 990.255 states:
“PHAs shall manage their properties according to an asset management model, consistent with the management norms in the broader multi-family management industry.”
      Then, in March 2006, HUD issued PIH Notice 2006-14, requiring all public housing authorities across the nation to convert to an asset-based management structure that makes each development responsible for its own economic survival.

      This new operating mandate, along with dramatic reductions in federal operating funds, has required housing authorities to model private sector property management.

1. How does this relate to SAHA’s interest in building and/or acquiring mixed-income communities?
   HUD’s directive is a major change to the way housing authorities have done business, requiring each property to now be financially self-sustaining. With a growing need for affordable housing in our community, SAHA is dedicated to increasing available units. However, the cost of real estate today, coupled with the new HUD requirement, make the operation of newly constructed or acquired quality affordable housing financially infeasible at 100% low-income occupancy. Instead, by purchasing existing developments and utilizing the mixed-income approach, only a relatively small percentage of units are set-aside for low-income residents, and the remainder are rented to market-rate customers. This mixed-income structure enables market-rate rents to compensate for the lower rents in the affordable housing component, providing a financially self-sustaining property and freeing taxpayer funds for use in other low-income housing programs.
2. What provisions allow housing authorities to own and operate mixed-income communities?
   Like most other large housing authorities in Texas, the San Antonio Housing Authority has various affiliate non-profit public facility corporations for the purpose of furthering its business operations, in accordance with Texas Local Government Code Chapter 303. Additionally, SAHA partners with private financial and development partners to further its mixed-income initiatives, as provided for in 24 CFR 941.600 et al., titled “Subpart F Public/Private Partnerships for Mixed Finance Developments,” which speaks to the inclusion of developments that consist of non-public and public housing.
3. Can mixed-income communities be successful?
   Mixed-income communities have proven successful across the nation. In 2004, SAHA opened San Antonio’s first mixed-income community on the site of the former Victoria Courts public housing community. Another seven mixed-income communities are currently under construction throughout the San Antonio area, providing nearly 270 affordable housing units for low-income residents and 1,300 market-rate units. While SAHA currently owns or manages 30 not-for-profit communities throughout the city, the mixed-income approach is relatively new to San Antonio. It has, however, proven widely successful in cities like Atlanta, Dallas and Seattle.
4. In a mixed-income community, what percentage of units is set-aside for low-income residents, and how does SAHA determine that percentage?
   The number of units set-aside for low-income residents in a mixed-income community is determined by a financial analysis of the property. In general, SAHA proformas 10-20 percent of units as affordable housing for low-income residents when conducting financial analysis of a property for purchase consideration.
5. How can SAHA afford to buy or build these mixed-income properties?
   SAHA currently has more than $16 million in federal Replacement Housing grant funds, most of which must be committed by August 2007 and expended by August 2008. These funds are utilized to pay for the portion of the mixed-income community that is set-aside for low-income residents. The remaining market-rate portion of the community is paid through bank debt, leveraged with the property itself, much in the same way a homebuyer mortgages a home. Any funds that SAHA does not commit by August 2008 must be returned to HUD.
6. How many mixed-income communities does SAHA plan to build or purchase?
   SAHA plans to increase its mixed-income portfolio to the extent that is fiscally feasible through our public/private mixed-finance resources. SAHA’s long-term plan is to make quality affordable housing available to the more than 17,000 low-income households now on SAHA waiting lists, and to the approximately 2,500 low-income households living in deteriorating public housing communities today. As mentioned earlier, SAHA presently has seven mixed-income communities currently under construction, including Rosemont at Highland Park, Midcrown Senior Pavilion Apts.,Villas de Costa Valencia, Primrose at Mission Hills, Artisan at Military, Artisan Park Townhomes and Costa Mirada.
7. Who will live in these mixed-income communities?
   The majority of the community residents will be market-rate customers, from 80 to 90 percent depending on the property’s financial analysis. The remainder of residents will be participants in SAHA’s low-income public housing program. Of those program participants, 98 percent report sources of income from full- or part-time employment or social security. With nearly one-half of our program participants being elderly/disabled, a low-income apartment is just as likely to be occupied by an elderly or disabled person, as it is likely to be an individual or a family with children. All of our program participants must pass eligibility screening, to include a criminal history background check.
8. How much will the low-income residents contribute to their rent?
   The formula used in determining rental payment is the highest of the following: 30% of monthly adjusted income (after allowed deductions); 10% of monthly gross income or $50 minimum rent.
9. How does SAHA plan to provide services for low-income residents who live in mixed-income communities?
   SAHA’s low-income customers have varying needs for supportive services. Those nearing self-sufficiency may own their own vehicles, and may be employed or may have completed or be nearing completion of job training or education programs. Others may require more assistance. Because SAHA is not a direct provider of services, the organization instead partners with more than 35 social service agencies to provide education, training and medical services.
10. How does a mixed-income community impact local taxes and school districts?
    All housing authority-owned property has a similar tax-exempt status as many other public purpose organizations, such as community centers, homeowners’ associations, hospitals, churches, schools, and others. As for area schools, SAHA works with local officials and school districts to mitigate the tax impact, whenever possible.
11. How do mixed-income communities affect property values?
    Many studies have shown no measurable impact of mixed-income communities on property values. In some cases, mixed-income communities have helped raise property values. In Atlanta, mixed-income communities that replaced public housing programs helped bolster neighborhood values and improved the appearance and atmosphere of the surrounding area. Here in San Antonio, there were similar concerns about property when SAMMinistries purchased property on the city’s north side. However, a recent San Antonio Express-News article, “SAMM Shelter Fits In Nicely, Proving Critics Wrong” tells of “public hearings that illuminated inter-class distrust,” but “Eight years later, even its most virulent foes conceded the SAMMinistries center turned out to be a quiet neighbor, without the feared effect on property values and crime.”
12. Why not just build or buy houses for low-income families?
    There are many agencies and organizations that focus very successfully on homeownership programs for lower income families. The San Antonio Housing Authority also has a homeownership program, but our primary focus is rental housing. SAHA receives more than $100 million of federal housing funds annually to operate and administer the rental housing needs of more than 21,000 families. While SAHA strongly supports homeownership initiatives, many of SAHA’s customers are either seniors or disabled persons, for whom the responsibility of homeownership is not a desirable option. Other SAHA residents may hope to ultimately own a home, but have not yet met the various eligibility requirements that would qualify them for a mortgage. Rental housing serves a vital need in our community, as homeownership is not always an option for everyone.
13. What is the current distribution of low-income housing opportunities in San Antonio?

    District	Approximate # of Households	Total # of SAHA units by District	Total % of SAHA units by District *
    1	42,937	3,236	15%
    2	41,450	3,744	18%
    3	42,893	2,323	11%
    4	41,784	1,744	8%
    5	41,013	2,943	14%
    6	44,308	1,621	8%
    7	44,700	2,078	10%
    8	44,321	1,757	8%
    9	41,634	608	3%
    10	43,459	1,019	5%
    All	428,499	21,073	100%
    * Includes public housing, Section 8 and affordable housing

    
    
14. Does the community have input in SAHA’s affordable housing plans?
    SAHA is a public entity and serves the needs of the San Antonio community. We believe the recent public interest in how and where affordable housing is created in our community has the potential to be a very healthy and productive discussion. To further facilitate this discussion, SAHA will be participating in group discussions and hosting a number of public forums in the near future. Details will be available as plans and schedules are confirmed.
    
    

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